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Lights will stay on, vows Davey

The lights will stay on despite the prospect of an "energy crunch" over the next few years, Energy Secretary Ed Davey has said.

Measures announced today will provide for payments to large energy users to reduce the power they take from the grid in peak times and supply reserves from power stations that would otherwise be closed or mothballed.

The measures would be a "last resort" to keep the lights on over the next two winters, Mr Davey told a conference on the UK's energy supplies in London.

And he reassured football fans that, in the unlikely event of England winning the World Cup in Brazil, television screens would stay on to show the momentous occasion despite predictions it would cause the highest ever domestic power surge.

Mr Davey said that while people may think the chances of England reaching the final and winning are unlikely or even "unimaginable", National Grid is planning for the possibility to prevent mass blackouts during the crunch game.

National Grid has also unveiled plans to tackle the energy crunch the UK faces over the next two winters when the capacity margin - how much the UK's total generating capacity outstrips the expected peak demand - is expected to shrink to as little as 2%.

Payments will be made to large energy users which can reduce their power use - for example by switching to back-up generation - during peak evening hours in winter on weekdays between 4pm and 8pm.

The scheme will be voluntary, and will ultimately help to save consumers money by preventing the need to build additional power plants to meet peak demand, National Grid said.

Energy regulator Ofgem's assessment last year warned that the capacity margin could fall from 6% to a low of between 5% and 2% in 2015/2016, before increasing as new power plants came online.

In his speech to the Economist's UK Energy 2014 conference, Ed Davey said there is an improved picture for 2014/2015 compared to last year's expectations, but the outlook for 2015/2016 still requires significant new interventions.

He emphasised the voluntary nature of the scheme, saying " Nobody will get cut off. No economic activity will be curtailed".

And he said: "Both the new demand and supply balancing services will be used only as a last resort - and are a safety net to protect households in difficult circumstances, such as a hard winter or very high surges in demand."

Mr Davey told the conference the UK, like other countries, faced issues over energy security due to rising global demand, reliance on imported resources and the need for massive investment in renewing the power sector.

He said the UK was judged to be the fourth most energy secure country in the world but there could be "absolutely no complacency".

The Government was addressing the UK's energy security by measures including developing homegrown resources such as shale gas, working to boost interconnectivity with European supplies and driving forward energy efficiency.

In the long term, investment in energy resources such as new nuclear reactors and renewables would help secure a low-carbon energy supply, and in the short term, National Grid's measures would deal with the low capacity before they came online.

National Grid's moves were welcomed by business leaders, but they called for action to tackle the long-term issues with the UK's energy infrastructure.

Dr Adam Marshall, business group BCC's executive director of policy and external affairs said: "National Grid is taking sensible steps to help Britain avoid a short term energy supply crunch.

"Incentives for businesses who can choose to use energy more flexibly could help ease the strain at times of peak demand.

"Yet this is just a first step in dealing with the long-standing deficiencies in Britain's energy infrastructure.

"Radical action is now required to improve both energy generation and distribution, to deliver the energy security that British businesses rightly demand.

"For too long, the UK has failed to plan adequately to guarantee the energy supplies required for our economy, businesses and consumers.

"Radical improvements to our energy infrastructure must be delivered - so that the sensible, voluntary measures announced do not become compulsory or problematic for businesses in future."

Nicola Walker, CBI director for business environment, said: "It's right for action to be taken to ensure we secure our energy supplies in the short-term. This also underlines the need for us to get the investment we need into our energy infrastructure to keep the lights on in the future.

"National Grid's voluntary arrangement for large energy users to reduce their electricity use is sensible, but in the long-term we need to focus on better energy efficiency in our businesses and homes."

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